Trade opens wider window to China

It's gone with the wind. Within the last two years, a massive chunk of the U.S. window coverings business has moved offshore to places like China, India, Pakistan and Turkey. Much of what's left appears to be following in short order.

It's created a seismic shift in the fundamentals of the business, moving the U.S. industry further away from making goods to sourcing them. Pricing is largely at the core, industry executives said, just as it is with other textiles categories. Marketplace demands for both cheaper and value-added goods are being further supported by a continued loosening of trade barriers.

"The discounters started it," said Alan Botwinick, national sales manager, National Curtain, "and the low prices are filtering up to the higher end."

S. Lichtenberg & Co. continues to increase the number of goods it brings from China, said Carl Goldstein, senior vice president. Moreover, he said, 2004 could be even better for the industry if interest rates stay low and housing starts continue to rise. But that outlook is still foggy in the coming year. "We're dealing in uncharted waters," Goldstein said.

That said, window appears to be winning more and stronger retail real estate. Within the last year, for example, Linens 'n Things reworked its window department to give it a notably stronger presence in expanded areas generally in the back of its stores.

Kathryn Thompson, vice president, soft window merchandising for Springs Industries, said, "I believe the category is growing for two reasons. One, styles cycle (and) people are looking to update their windows. Soft windows are 'in' again — look at the shelter books and catalogs. Two, the value pricing we offer allows us to give the customer (the impetus to) drive sales."

She explained that fabrics with embellishments are adding further value, as may be seen in the growth of drapery weight styles against sheers.

Springs Industries completely halted its domestic production of window coverings last year, Thompson said. Working out of its Shanghai office, the company is importing more from China. It is continuing to manufacture from the former Burlington facility in Mexico, while also bringing in goods from India, Turkey and Pakistan.

And within the last several months, Croscill shuttered one plant consolidating its U.S. cut-and-sew window facility, an acknowledgement, in part, of imports' impact, chief operating officer Doug Kahn said at the time. Croscill's domestic cut-and-sew operations have declined from 50 percent of units a year ago to 30 percent today, he said. It, too, has committed to bulking up its Shanghai sourcing office.

Miller Curtain produced 98 percent of its goods domestically, but that will erode as imports rise. The company recently began operations at a new factory outside Guadalajara, Mexico, said Gerd Miller, president, and it also imports from Southeast Asia and other areas.

Even smaller companies — like Oxford House in Oxford, N.C. — feel the pressures of pricing, despite the fact Oxford focuses on higher-end laces. "The value has been driven down by low-quality product," Barbara Tippin, they company's vice president, sales and marketing, said.

For example, velvet panel prices have come down, she said, and if a velvet panel costs $20, "How do I convince buyers that my $29.99 panel has that perceived value?" Tippin continued, "Where the business is strong is where the business is unique."

Oxford House does well with specialty and smaller stores, she said, but with larger retailers it's much harder to break in, often because buyers perceive the offerings as just "another cheesy lace."

Pricing is "definitely the state of the industry," said Jenny Gruber, vice president, design, of two-year-old Evandale. That's particularly true at the basics level, where prices are more sensitive. She noted that retailers seem generally more willing to work cooperatively with suppliers to achieve satisfactory and competitive programs.

Beside pricing issues, the move offshore has also opened the door to countries that produce unique fabrics and weaving techniques, said Andrew Riesel, vice president of Richloom Fabrics Group and president of Richloom Home Fashions. The price sensitivity mostly affects basic commodity items anyway, he added, while more styled products feel less pressure.

There aren't as many new retail outlets, Riesel said, and it becomes more an issue of market share. "You grow by garnering more share."

Several companies have used their sources from the bath area to also encompass window. National Curtain has imported for years, but mostly from Turkey, said Alan Botwinick, the company's national sales manager, while it brings in shower curtains from China.

"We're looking to do much more from China," he explained. Several years ago Turkey was the popular country to import from, "and we benefited from that, but the world changes quickly."

Botwinick noted that some retailers are maintaining higher price points, but customers are expecting more quality than they were two or three years ago at the same price points. A magical $19.99 used to be a key point. "Now we have to provide an unbelievably (better) product compared to several years ago."

Barry Goodman, vice president, Commonwealth, agreed. "We used to be able to manufacture a decent product for $29.99; now it's gone the opposite way, and $19.99, $14.99, $9.99 is the norm."

The lifecycle of products is also much shorter, said Jonathan Sadinoff, executive vice president, Beacon Looms. "The days of five-year and 10-year products are dwindling." One trick is "to make sure you are at the forefront, from the consumer's standpoint."

That sentiment seems universal, regardless of size.

"The challenges for us are to keep ahead of everyone in terms of design and be quick to market," Springs' Thompson offered. "Our design team is excellent, but there are many competitors out there in this category — lots of niche players."

Historically, D. Kwitman and Son imported from Europe, and then gradually moved East. China now accounts for half of its window coverings, and it even owns manufacturing there. But "China doesn't do everything — and it doesn't do everything well," intoned Hal Kwitman, president.

Though Van Nuys, Calif.-based Veratex is "only in the embryonic stage" of the standalone window business, it plans to do more now that stores have started to emphasize it again. The challenge, Dale Talbert, vice president, said, is price resistance. "We're really stuck at a $49.99 price point and it's a very difficult sale now. ... What's wrong with selling a domestically made item for $69.99 when two years ago we sold it for $120? ... We need to get beyond that."